UPDATE 1-U.S. Senate averts looming government shutdown

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By Andy Sullivan

WASHINGTON, Sept 30 (Reuters) - The U.S. Senate averted a looming government shutdown on Wednesday by passing a stopgap bill that temporarily funds federal operations for another month while lawmakers finish work on spending legislation.

The bill, which passed by a vote of 62 to 38, has also passed the House of Representatives and now heads to the White House for President Barack Obama to sign into law, presumably before the new start of the fiscal year on Thursday.

Lawmakers have not finished work on the 12 spending bills that fund government operations for the new fiscal year, and a messy government shutdown would have ensued had they not passed the stopgap measure.

With the United States fighting two wars and struggling to climb out of the worst economic downturn since the 1930s, "it is inconceivable that we would allow for any disruption in the essential services provided by the federal government," said Democratic Senator Daniel Inouye, who chairs the committee that oversees spending.

Democrats, who control both houses of Congress, attached the must-pass bill to a separate $4.7 billion measure that boosts congressional operations by 3.4 percent for the coming fiscal year and includes increases for staff pay and perks. It does not include a salary increase for lawmakers.

Republicans said they should have had a chance to vote on the two measures separately, or at least try to change them.

"It's really a direct assault on how we do business here in the United States Senate," said Republican Senator John McCain.

He said the boost for congressional budgets was distasteful at a time when many Americans are struggling with the economic downturn.

Last-minute budget wrangling has become an annual event in Congress, which last completed its spending bills on time in 1994.

The temporary spending measure would fund government operations largely at their current levels through Oct. 31, with a boost for veterans' medical care and Census operations.

The bill prevents highway programs from expiring and allows the Postal Service to cover a budget shortfall by reducing the amount it must pay to its retirement account by $4 billion.

It would prohibit federal funds from going to ACORN, a liberal grass-roots group facing an avalanche of scorn after a conservative activist secretly videotaped employees giving tax and housing advice to a couple who said they wanted to set up a brothel.

The federal government was temporarily shut down in 1995 and 1996 due to a spending dispute between Democratic President Bill Clinton and Republicans who controlled Congress at the time. (Editing by Chris Wilson)